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Presented byDeborah Markley, Center for Rural EntrepreneurshipInes Polonius, alt.Consulting
Building Wealth Using WealthWorks Value Chains
Deborah Markley• Co-Founder and Managing Director, Center for Rural
Entrepreneurship
Ines Polonius • Executive Director, Alt.Consulting, Inc. • Arkansas Green Energy Network (AGEN)
Introductions
• Learn about the WealthWorks approach to rural development through story and discussion.
• Appreciate the role of value chain intermediaries in the WealthWorks approach.
• Define the fundamental elements of the approach including wealth creation value chains and the use of the wealth matrix as a tool for planning and evaluation.
Objectives of this Presentation
• Wealth, broadly defined, is the foundation for prosperity.
• Poor places and people will stay poor unless they are connected to larger economies.
• Poor rural places have assets which, if properly developed, can contribute to larger regional economies.
Why a Wealth Creation Approachto Livelihood Development?
Why a Wealth Creation Approachto Livelihood Development?
• Those assets can be developed and linked to markets in ways that create multiple forms of wealth.
• Structures exist and can be created that will cause that wealth to stick in rural areas instead of being extracted.
• Wealth that sticks leads to improved livelihoods.
#1 WealthWorks is demand driven.#2 WealthWorks is intentionally inclusive.#3 Wealth is tied to place by WealthWorks value
chains.#4 Measurement is integrated into the entire
process as a tool for planning and adaptive management.
#5 Wealth sticks in rural areas through attention to structures of ownership and control.
#6 The WealthWorks approach is strategically flexible while doing no harm.
Guiding Principles
Principle #1:
WealthWorks is demand driven.
Guiding Principle
AGEN
Regional / Urban Demand:• Purpose: Bring new money into rural
communities, allow wealth creation• Valero needs biofuel to meet blending
requirements per EPA RFS2. Interested in investing in getting value chain to scale.
• FedEx commitment: 50,000 gallons/dayLocal Demand:• Purpose: Price stabilization for
vulnerable budgets• Municipalities and county governments
want stable fuel prices• School system: Burn cleaner fuel in
school busses transporting children
AGEN: Identifying Demand
Principle #2:
WealthWorks is intentionally inclusive.
Guiding Principle
AGEN
• Winter crop for soybean and cotton farmers Focus: Minority and small
farmers• New Entrepreneurial Opportunities
Micro-Bio-Refineries Waste Oil Collection Seed Management Seed Crushing Manufacturing of Refineries
Example: Intentional focus on minority farmers by providing technical assistance, help with planting and harvesting.
AGEN: Creating Wealth Intentionally
Principle #3:
Wealth is tied to place by WealthWorks value chains developed within sectors.
Guiding Principle
• A business model that delivers economic, social, and environmental values in response to market demand.
• Buyers, processors, producers and other transactional partners work together for mutual benefit to create value in response to market demand.
• Includes direct engagement by supporting players who may not be direct transactional partners – educators, researchers, technical assistance providers, financers, policy-makers, etc.
A WealthWorks Value Chain is…
Traditional Supply Chain
Chain starts with producer supply
Measured by net income produced
Everyone is in it for him/herself
Power determines who gets paid how much for their role
Participants try to pass on costs to others within or outside of chain
Tries to influence policy to create advantage and maximize short-term income
WealthWorks Value Chain
Chain starts with consumer demand
Measured by wealth created/retained
Everyone is in it together
Intentionally balances mutual benefit of all in chain
All known costs are considered and addressed
Tries to influence policy to level the playing field and maximize long-term and widely shared wealth
Value Chains vs. Supply Chains
AGEN
AGEN: Deep Collaborations
• Seeking larger systems change
• A move beyond partnerships focused on specific projects
• Deep collaboration built on each member’s self interest
• Self interest creates momentum!
• Example: Initial conversations with individual members identified their self interest. “What is in it for YOU?”
• Collaboration is problem solving together almost on a weekly basis.
Demand for biofuelLocal municipalities, school districts, farmers, truckers
Regional companies - Valero, FedEx
Local and
State Policy
Support
MSCC Mini Refinery Micro Refinery
Spring-board Diesel Mfg Dist
Gir Ener
gy Mfg
Angel Investor
Net workLoan Funds
Waste Vegetable Oil Collection Businesses
Source of WVO: restaurants,
convenience stores, schools,
hospitals,prisons,casinos, etc.
Community Mktg
Strategy Ed/promo materials
Community Recycling Programs
Progressive Community Leadership
Trans-porta-
tion
Camelina Seed Processing Company
Growers of Camelina: Minority, Non-
Minority Farmers
Camelina research
ASU, PCCUA
Camelina Agronomic
Service Business
USDA Support
Programs: NAP, Cover Crops, Crop Insurance
ADTEC RET
Train ing
Fuel Blend
er Distri butor
Animal FeedComposting
Cosmetic mfg
By Prod uct
Meal
By Product Gly ce rol
Principle #4:
Measurement is integrated into the entire process as a tool for planning and adaptive management.
Guiding Principle
Seven Forms of Capital
Individualcapital
Socialcapital
Financialcapital
Naturalcapital
Builtcapital
Intellectualcapital
Creating wealth that sticks is rarely an intentional goal, even when we define wealth broadly.
Politicalcapital
What do we mean by “Wealth?”
Type of Wealth Interventions in Value Chains
Individual How will your intervention impact the stock of skills and physical and mental healthiness of people in a region?
Social How will your intervention impact the stock of trust, relationships, and networks that support civil society?
Intellectual How will your intervention impact the stock of knowledge, innovation and creativity?
Natural How will your intervention impact the stock of unimpaired environmental assets in a region
Built How will your intervention impact the stock of fully functioning constructed infrastructure?
Political How will your intervention impact the stock of power and goodwill held by individuals, groups, and/or organizations?
Financial How will your intervention impact the stock of unencumbered monetary assets at the individual and community level?
A wealth matrix for planning and evaluation
AGEN
Type of Wealth Interventions in Value Chains
Individual# of farmers growing Camelina Baseline: 0; 3 in Spring 2013# of entrepreneurs who have started micro-refineriesBaseline: 0; Today: 1 entrepreneur preparing to produce by Oct 2013
Social # Number of groups engaged in renewable energy policy work and the strength of their relationships Baseline:1; Today: 5
Intellectual # of requests for renewable energy installations from municipalities, residents, and business. Baseline: 0; Today: 3
Natural # of gallons replaced by biodiesel produced in the Delta Baseline: 0; Today: 1360 gallons
Built# of micro refineries functioning within the value chainBaseline: 0; Today: 1 micro-refinery on campus of MidSouth CC fully operational
Political # co-sponsors on renewable and energy efficiency bill and how far the bill advances in the political process. Baseline: 0; Today: 10 legislators; 4 bills approved by committees
Financial Value of external investment in value chain. Baseline =0. Today 5 local investors committed to invest $1.2 million.
AGEN: Examples of Measures
Guiding Principle
Principle #5:
Wealth sticks in rural areas through attention to structures of ownership and control.
AGEN
Value chain meeting in January 2012
focused on ownership structures.
AGEN: Ownership Models
1. Entrepreneurial Model: Individual / Local investors purchase refinery to serve local and regional markets
2. Farm Coop Model: Coop owns refinery and converts farmers’ crop into fuel for on-farm use on a contract basis.
3. Municipality owns refinery and leases it to entrepreneur with right to purchase % of output
Intentionality: Focus on micro-refinery that costs $250,000 enabling investors to be local and wealth to stay in local communities
Principle #6:
The WealthWorks approach is strategically flexible while doing no harm.
Guiding Principle:
AGEN
AGEN: Strategic Flexibility
1. Members introduce new opportunities Solar Bioenergy
2. Problem solving together Financing barrier led to 3 potential models
3. Connectedness Community leaders Market players Political influence
Transformational Benefits of a Value Chain
Intermediary’s role: Maintain values, do no harm
Central Appalachia
Energy efficient housing, energy efficiency, food, forestry
Alabama Black Belt and Mid-South
Renewable energy, investment, forestry, food, community-based tourism
Lower Rio Grande Valley region in Texas
Green housing/neighborhoods, literacy
Where are we working on the ground?
Please visit:www.creatingruralwealth.org andwww.yellowwood.org/wealthcreation.aspxwww.altconsulting.org
Or join the Community of Practice at www.ruralwealth.org
Or contact:Ines Polonius Deborah Markleyalt.Consulting, Inc. Center for Rural 870-535-0011 [email protected] 919-932-7762
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